PROCUREMENT POLICY AND CRITICAL EQUIPMENT SUPPLY - Petrobrasantigoprominp.petrobras.com.br/objects/files/2008-07/2200_3 Marco... · The Petrobras focus on supply market (in Brazil

PROCUREMENT POLICY AND PROCUREMENT POLICY AND CRITICAL EQUIPMENT CRITICAL EQUIPMENT

SUPPLYSUPPLY

July / 2008July / 2008 11

Disclosure

The presentation may contain forecasts about future events. Such forecasts merelyreflect the expectations of the Company's management. Such terms as "anticipate","believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along withsimilar or analogous expressions, are used to identify such forecasts. These predictionsevidently involve risks and uncertainties, whether foreseen or not by the Company.Therefore, the future results of operations may differ from current expectations, andreaders must not base their expectations exclusively on the information presentedherein. The Company is not obliged to update the presentation/such forecasts in light ofnew information or future developments.

Cautionary Statement for US investors

The United States Securities and Exchange Commission permits oil and gas companies,in their filings with the SEC, to disclose only proved reserves that a company hasdemonstrated by actual production or conclusive formation tests to be economicallyand legally producible under existing economic and operating conditions. We usecertain terms in this presentation, such as oil and gas resources, that the SEC’sguidelines strictly prohibit us from including in filings with the SEC.

22

LOCAL CONTENT LOCAL CONTENT SUPPLY POLICYSUPPLY POLICY

33

Local Content – Supply Policy

Supply Policy to maximize Local Content

Petrobras Local Content

Policy

Petrobras recognizes in local supplying market opportunities to improve cost effectiveness and quality standards of the present and future projects;

After sales, provided by local suppliers, use to be faster and friendly if compared with the same service provided by foreign companies;

The Petrobras focus on supply market (in Brazil or abroad) is over competitiveness and sustainability of the suppliers of goods and services;

The Petrobras Local Content policy is connected and contributes for the Petrobras Social Responsibility Policy.

44

Local Content – Supply Policy

Supply policy to maximize local content

Petrobras(as G&S

purchasing company) Local content -

also for G&S on downstream

contracts

Financing Agent(BNDES -

development bank)Minimum Local

Content requirement for financing concession

Brazilian Regulatory Agency(ANP)

Minimum Local Content requirement

in 9 bidding rounds of exploratory blocks

(since 1997)

Local content(Manual for Local

Content Assessment)Calculated with

specific methodology to measure the real

value of locally manufactured goods

and services.

Minimum Local Content

requirement at contracts for oil

field development

55

BRAZILIAN COMPANIESBRAZILIAN COMPANIES

66

‘Brazilian companies’ means companies that have manufacturing processes and

after-sales services in Brazil, creating jobs and collecting taxes in the country.

Brazilian Companies

77

CRITICAL GOODS AND CRITICAL GOODS AND SERVICESSERVICES

88

SectorsInsufficient fulfilment of

future demands

Product portfolio

Low local content

Low R&D Activity

Process Technology

Basic Industrial

TechnologyEngineering Professional

Qualification

Mills 1 1 0 0 0 0 0 0 0 0

Pipelines 1 2 0 0 0 0 0 0 0 0

Flanges and Connections

Boiler Works

Rods and Socker Road Pumps 0 1 0 0 0 0 0 0 0 0

Subsea 1 1 1 1 1 0 0 0 0 0

Pumps 1 1 0 0 1 0 0 0 0 0

Compressors

Gas and Diesel Motors

Turbines 1 0 0 1 0 0

Cranes and Hoists

Valves

Generators and Electrical Motors 1 0 0 0 0 0 0 0 0 0

Substations and Transformers 0 1 0 0 0 0 0 0

Automation and Instrumentation

Engineering Services

Construction Services

Bottlenecks and challengesTechnologyInfrastructure Staff

Services

Technological Basis

Tran

sfor

min

g In

dust

ry

Met

alur

gica

l Te

cnol

ogy

Mec

hani

cal T

echn

olog

y

Mar

ine

parts

Ele

ctric

Te

chno

log

Actions Increase of production capacity

Incentive to domestic production of components

12

34

5

6

Sources: Institute of Economy UFRJ

Incentive to R&D activities in Brazill

(Not a priority)

Competitiveness Diagnosis of Brazilian IndustryHigh Competitiveness Sectors



(Not a priority)

CRITICAL EQUIPMENT

Special alloys (for boiler works) and forged alloys

Pipelines 14-42” diameter with longitudinal welding;

Polished rods with centering guides;

Polyester cables and mooring systems;Drilling pipes and fiberglass pipes;Electrical cables for CSP (Centrifugal submersible pumping);Well control systems, oil and gas metering systems for drilling activities;Offshore drilling rigs;Gravel Packing;Drilling bits;Production pipes with special alloys coatings(13 Cr, Super 13 Cr);

Pumps - API standards;

Electrical dry transformers;

1

2

5

3

4

699


future demands

Product portfolio

Low local content

Low R&D Activity

Process Technology

Basic Industrial


Qualification

Mills 1 1 0 0 0 0 0 0 0 0

Pipelines 1 2 0 0 0 0 0 0 0 0


Boiler Works

Rods and Socker Road Pumps 0 1 0 0 0 0 0 0 0 0

Subsea 1 1 1 1 1 0 0 0 0 0

Pumps 1 1 0 0 1 0 0 0 0 0

Compressors

Gas and Diesel Motors

Turbines 1 0 0 1 0 0

Cranes and Hoists

Valves

Generators and Electrical Motors 1 0 0 0 0 0 0 0 0 0

Substations and Transformers 0 1 0 0 0 0 0 0





Services

Technological Basis

Tran

sfor

min

g In

dust

ry

Met

alur

gica

l Te

cnol

ogy

Mec

hani

cal T

echn

olog

y

Mar

ine

parts

Ele

ctric

Te

chno

log



Incentive to domestic production of components


(Not a priority)

12

34

5

6

A

B

IMPORTED COMPONENTS

A

B

Christmas Trees – forged alloys and electronic systems;Umbilicals: Nylon 11,inox flexible pipes and aramid fiber;Flexible pipelines: External polymers and alloys;

Imported assemblesRoller bearings and automationSteel and copper plates

Competitiveness Diagnosis of Brazilian IndustryHigh Competitiveness Sectors

1010


future

Product portfolio

Low local content

Low R&D Activity

Process Technology

Basic Industrial


Qualification

Mills

Pipelines

Flanges and Connections 1 0 1 1 1

Boiler Works 1 1 1 1 1 1 1

Rods and Socker Road Pumps

Subsea

Pumps

Compressors (Alternative) 1 1 1

Gas and Diesel Motors 1 1 1

Turbines

Cranes and Hoists 1 1 1

Valves 1 1 1 1 1 1

Generators and Electrical Motors

Substations and Transformers


Engineering Services 1 1 1 1 1 1

Construction Services 1 1 1 1


Services

Technological Basis

Tran

sfor

min

g In

dust

ry

Met

alur

gica

l Te

cnol

ogy

Mec

hani

cal T

echn

olog

y

Mar

ine

parts

Ele

ctric

Te

chno

log

7

8

9

10

11

12

Competitiveness Diagnosis of Brazilian IndustryMedium Competitiveness Sectors


Source: Institute of Economy UFRJ and Petrobras

Technological update Partnership with foreign companies

CRITICAL EQUIPMENT

HCC Reactors (250-300 mm wall width 200kgf/cm2 internal pressure) Boiler works with special alloys (reactors, towers and pressure vessels) Boilers (steam generators); High pressure heat exchangers with H2S tracesStructured packing for process towers

Moto-compressor and bare compressor

Heavy service engines

Offshore and marine cranes

Special submarine sphere valvesForged valves

Basic and thermal design

8

7

9

10

11

12

1111


future

Product portfolio

Low local content

Low R&D Activity

Process Technology

Basic Industrial


Qualification

Mills

Pipelines


Boiler Works

Rods and Socker Road Pumps

Subsea

Pumps

Compressors (Centrifugal) 1 1 1 1 1 1 1 1 1 1

Gas and Diesel Motors (heavy work) 1 1 1 1 1 1 1 1 1 1

Gas Turbines 1 1 1 1 1 1 1 1 1 1

Cranes and Hoists

Valves

Generators and Electrical Motors

Substations and Transformers

Automation and Instrumentation 1 1 1 1 1 1 1 1 1 1




Services

Technological Basis

Tran

sfor

min

g In

dust

ry

Met

alur

gica

l Te

cnol

ogy

Mec

hani

cal T

echn

olog

y

Mar

ine

parts

Elec

tric

Tech

nolo

g

Importing / To incentive the introduction of foreign companies in Brazil

Competitiveness Diagnosis of Brazilian IndustryLow Competitiveness Sectors

Source: Institute of Economy UFRJ and Petrobras

Actions1212

Technological Development

Materials and Equipment to be developed in next years

• Submarine sensor for measuring oil and grease degree in water;

• Signal optical cable for well temperature and pressure monitoring;

• Submarine optical connectors;

• Intelligent sensor network for natural gas flow measurement;

• Internal for piping in the radiation zone of industrial furnaces;

• Co-generation system using biomass as fuel;

• Submarine sphere valves;

• Monitored cathodic protection system for pipelines.

1313

ACTION

Other E&P Critical Services

Area Services

E&P

Drilling ;Well Completions; Flexible lines and umbilicals (installation);Support to diving;Support to ROV operation;Support to mooring activities;Special support vessels;Well subsea connections.

Each service has a specific strategy

1414

ACTIONSACTIONSACTIONS

Introduction/enlargement of industrial infrastructure Introduction/enlargement

of industrial infrastructure

To incentive the domestic production of componentsTo incentive the domestic

production of components

Technological updateTechnological update

Competitive SectorsMedium

Competitiveness Sectors

Sectors without local manufacturing

Gen

eral

act

ions

• Mills• Pipeline• Subsea• Pumps• Steam Turbines • Generators and

electrical motors

Sectors eligible to incentives

• Flanges and connectors• Boiler works• Alternative compressors• Gas and Diesel Engines• Cranes and winches• Valves• Engineering• Construction and

Assembling

• Subsea• Generators and

electrical motors

• Flanges and connections• Boiler works• Valves• Engineering• Construction and

Assembling

• Centrifugal compressors

• Heavy duty gas and diesel engines

• Gas Turbines

• Automation and Instrumentation

Partnership with foreign companies

Adapting the National Supply EstateProposed approaches

1515

PETROBRAS GOODS AND PETROBRAS GOODS AND SERVICES CONTRACTS SERVICES CONTRACTS

HISTORICAL INFORMATIONHISTORICAL INFORMATION

1616

Goods contracting – US$ Millions

1717

Services contracting – US$ Millions

1818

SUPPLY STRATEGIES FOR GOODS AND SERVICES

As per 2007As per 2007

US$ 5.2 Bi

US$ 23.6 Bi

US$11.0 Bi

• Service providers

• EPC

•Shipyards

•Constructors

• Manufacturers

• Distributors

• Retailers

•Equipment

•Chemicals

•Spare parts

•Etc.

• Seismic

•Drilling

•Transport

•Etc.

• Platform

•Refinery

•Revamps

•Etc.1919

SUPPLYING GOODSSUPPLYING GOODSAND SERVICES TOAND SERVICES TO

PETROBRASPETROBRAS

2020

Supplying to Petrobras

• Access www.petrobras.com.brSelect English version;

and than select Provider Channel, orSelect Supplier Channel.

» There you can access - CONDITIONS FOR THE SUPPLY OF MATERIAL - CFM 2005.

• Brazilian Law:DL 2745, devoted to Petrobras

establishes clear rules for Petrobrasand their suppliers.

2121

RELEVANT EQUIPMENT RELEVANT EQUIPMENT DEMAND FOR THEDEMAND FOR THEPERIOD 2008 PERIOD 2008 -- 20152015

2222

Relevant equipment demand for the period2008 - 2015

Items Units ofMeasurement

Total Amount( 2008 ~ 2015 )

Structural Steel t 1.252.000Air Coolers un 721Mooring Cables km 2.726Christmas Trees un 3.930Safety boats un 344Pumps un 10.264Lifeboats un 1.978Well Heads un 3.657Compressors un 969Fan Coils un 2.818Heat Furnaces un 252Heat Reformers Furnace un 8Eletric Generator un 439Crane un 220Flexible Pipes m 7.200Diesel Engines un 717Eletric Motors un 17.035Reactors un 317Storage Tanks un 2.824Process Towers un 732Eletric Transformers un 1.236Heat Exchangers un 5.913Pipe lines t 1.542.266Turbines un 441Production Rigs un 36Pressure Vessels un 4.829 2323

Strategies for Contracting Goods and ServicesStrategic Contracting Matrix

Supply Source Management

Categories of non-critical items and concentrated supply

market. This category shall be managed in order to minimize the supply risks (ex:long term

contracts, consortiums, outsourcing central-

coordination and local requests)

Supplier ManagementCategories of strategical and complex items. This category shall be managed in order to provide the maximum control

degree of the supply source (ex: partnerships, vertical integration,

supplier development)

Aquisition Process Management

Categories of non-critical items on technical specifications and

plenty of suppliers in the market. This category shall be managed

aiming to minimize the acquisition process costs (ex: outsourcing, local purchases ordering, standardization, e-

Procurement)

Item ManagementCategories of high criticality items (technical specifications of utmost

importance) and plenty of suppliers in the market. This category shall

be managed in order to assure the repetitiveness of the low cost. The process shall allow the control of future price (ex: auctions, short

term contracts, aggressive negotiations, replacement,

consolidation etc)

High

Low

Low

Mar

ket C

ompl

exity

(Ex

tern

al F

acto

r)

HighCriticality of Item (Internal factor)

“The concept of the Strategic Matrix is to identify a contracting strategy for each item category, taking into account the criticality of the item and the complexity of the supplier market ”

Strategic itemsBottlenecks

LeveringOpportunities

2424

July / 2008July / 2008

PROCUREMENT PROCUREMENT DEPARTMENTDEPARTMENT

[email protected]

2525

PROCUREMENT POLICY AND CRITICAL EQUIPMENT SUPPLY - Petrobrasantigoprominp.petrobras.com.br/objects/files/2008-07/2200_3 Marco... · The Petrobras focus on supply market (in Brazil

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